12 Charged in Minority Businesses Scheme

By SELWYN RAAB

Published: May 19, 1995

Two brothers identified by prosecutors as Mafia members were accused yesterday of illegally obtaining $5 million in asbestos-removal and construction contracts from New York City and state agencies that were intended for minority-owned companies.

The brothers, Joseph and Louis DiNapoli of Scarsdale, were arrested after an indictment was unsealed in Manhattan charging them with creating three front companies in a racketeering scheme that fraudulently obtained more than a dozen contracts since 1987 for work in the schools, hospitals and subways.

The indictment by a state grand jury also accused 10 other people of conspiring with the DiNapoli brothers to establish and run the companies and to misrepresent the firms as being owned by a black man, a Hispanic man and a woman. After being certified by state and city agencies as minority business enterprises, the companies were eligible for contracts even if their bids were as much as 10 percent higher than the lowest bid.

"This is one of largest cases ever developed of an organized crime group stealing benefits that should have gone to minorities and women," Robert M. Morgenthau, the Manhattan District Attorney, said in announcing the indictment.

Programs intended to increase the number of contracts for companies owned by women and minorities have been used by many levels of government nationwide for two decades. But their efforts have been plagued by abuses, including allegations that many companies benefiting from the programs are controlled by white businessmen.

In 1984, the State Commission of Investigation called the state's program a failure, and the Dinkins administration's efforts to steer more contracts to women or minorities were marred by the use of companies that appeared to be linked to white businessmen. Under the Dinkins administration, the city had a goal of awarding 20 percent of the value of all contracts to companies owned by black, Hispanic, Asian, and American Indian people and women.

In the latest case, Mr. Morgenthau emphasized that there was no evidence that the companies did poor work, mainly the sealing or removal of asbestos.

At the news conference, William J. Bratton, the city's Police Commissioner, said, "This is a vivid reminder how organized crime is literally into everything in this town."

Investigators from the Manhattan District Attorney's office said that two conspirators, whom they declined to identify, were overheard on a wiretap last year complaining that Mayor Rudolph W. Giuliani had changed city policies, making it more difficult for minority-run companies to obtain contracts.

"They were actually griping about how tough Giuliani was going to make it for them to continue getting contracts through these phony companies," an investigator said.

The indictment also said the defendants cheated their employees, mainly immigrants from Poland and El Salvador, of $1 million by not paying them the wages required.

Joseph DiNapoli, 59, was described in the indictment as a capo, or captain, in the Lucchese crime family, and Louis DiNapoli, 56, was listed as a soldier in the Genovese family. Law-enforcement officials said members of different Mafia families often cooperate and share profits.

In two cases, Joseph DiNapoli was indicted on May 3 on Federal charges of insurance fraud, and he is awaiting sentencing on a Federal conviction for loansharking.

Another brother, Vincent DiNapoli, was convicted of two Federal racketeering charges in the 1980's and was then described by prosecutors as the construction industry overseer for the Genovese family.

Joseph and Louis DiNapoli and the 10 co-defendants were each charged yesterday with participating in a racketeering enterprise under the state's Organized Crime Control Act. Each defendant faces up to 25 years in prison if convicted, but lawyers said that it was unlikely that most of the defendants, who have no criminal convictions, would receive the maximum sentence.

All of the defendants pleaded not guilty at hearings yesterday in State Supreme Court in Manhattan. Louis DiNapoli was released on $2 million bail and the others were released on bails of $50,000 or less.

The inquiry was started by Mr. Morgenthau's office two years ago as a spinoff from a labor racketeering investigation concerning the owners of the De-Con Mechanical Contractors Company in the Bronx. During the De-Con case, investigators overheard on court-authorized telephone taps conversations about the sham minority-owned companies, officials said.

Daniel Castleman, chief of Mr. Morgenthau's investigation division, said that the scheme began in 1987 with the incorporation of the Asbestos Carting Corporation at 315 Casanova Street in the South Bronx. Peter Velasquez, 40, of New Rochelle, was falsely listed as the company's president and owner, the indictment charged.

Working mainly as a subcontractor, Asbestos Carting got $3 million in city and state projects.

According to the indictment, Asbestos Carting was so successful that the DiNapoli brothers organized P & T Excavation Corporation and Precision Abatement Corporation, both at 1821 Mahan Avenue in the South Bronx. The indictment said that Marguerite Trombetta, 37, of the Bronx was installed as the false owner of the P & T company and Sterling Crockett, 33, of Bayside, Queens, as the fake head of the Precision Company.

Mr. Castleman said that the three companies filed fraudulent documents to obtain certification as minority-run companies. The indictment charged that the false filings were aided by two lawyers, Robert Fardella of Smithtown, L.I., and Leonard Angelo of Yonkers, and an accountant, Martin Cohen, of Great Neck, L.I.

The asbestos containment and removal jobs included work at Bellevue Hospital Center and Metropolitan Hospital Center in Manhattan and Goldwater Memorial and Coler Memorial Hospitals on Roosevelt Island; the Brighton Beach subway line and P.S. 165 in Manhattan, P.S. 169 in Queens and P.S. 61 and 102 in the Bronx. The P & T company also was an excavation subcontractor at P.S. 30 in Manhattan and at P.S. 95 in the Bronx.